10:30 pm - Monday December 18, 2017

Next Level for Trade Repositories – Part I


In financial markets, trading means performing a transaction that involves the selling and buying of commodities, equities, fixed income securities, foreign exchange and derivative products
Trade Repositories are entities are required to maintain a centralized electronic record or database of derivatives’ trade data. Reporting derivatives data to a Trade Repository enables the regulatory authorities to have accurate information concerning a derivatives contract shortly after it is entered into, as well as information concerning any changes to the contract throughout its existence.

Focus of Next Level

A well-designed TR that operates with effective risk controls can serve an important role in enhancing the transparency of information to relevant authorities and the public, promoting financial stability, and supporting the detection and prevention of market abuse. An important function is to provide information that supports risk reduction, operational efficiency, and cost savings for both individual entities and the market as a whole.

With the current structure of Trade Repositories, no authority will be able to examine the entire global network of Over The Counter Derivatives data at a detailed level. It is also likely that this data will be held in multiple Trade Repositories, requiring some form of aggregation of data to get a comprehensive and accurate view of global market and activities.


Data stored in a Trade Repository can be aggregated and accessed to reflect and serve the basic levels of details in three different dimensions – depth, breadth and identity. While depth specifics will deal with transaction/position/aggregate level, breadth specifics will deal with participants or underliers level. Identity specifics refer to whether the reported data identifies counterparty information (at the transaction or position level) or contains only anonymised data and if anonymised whether it contains any identifiers that would allow unique participants to be separately identified.

Select IFIs – International Financial Institutions – IMF, the World Bank and the BIS foster and support financial stability through assessment of global markets, sectors or specific countries. Naturally these agencies will require data by type of counterparty and potentially also country of origin and anonymised position level data and therefore they may require access to trade repositories in appropriate form and manner
Authorities with a market surveillance and enforcement mandate are required to maintain the integrity of the market by monitoring for, detecting and deterring market abuses such as anomalous trading, market and price manipulation, insider trading, market rigging and front running. Trade Repositories will play a central role in enhancing appropriate access to these authorities and their ability to effectively monitor market activity.
The functions involved in regulating, supervising or overseeing a TR typically involve supervision of the TR platform itself (eg operational risk management) and require the TR supervisor to be able to access any data in the TR, including any data reported to the TR. In carrying out these responsibilities the supervisor’s access to TR market data would be designed to assist the supervisor in assessing the TR’s compliance with applicable requirements.

The supervision of market participants involves the enforcement of rules and regulations, as well as the monitoring of potentially problematic activities, such as excessive risk-taking. Some authorities have established or will impose registration (or licensing) standards, capital standards or other financial resources requirements, internal risk management and/or inspection requirements. Effective execution of this mandate, including monitoring compliance with these requirements and the reporting obligation, will require access to data that provide an accurate reflection of participants’ transaction activity.

Some authorities have established, or will impose, business conduct and other regulatory requirements on market participants. These requirements may include a duty to implement policies and procedures designed to control and manage risk; to assess counterparty or client suitability; to disclose inducements; to act with the requisite degree of expertise, care and diligence in dealings with counterparties or clients; to ensure all marketing and communications to counterparties or clients are fair, clear and not misleading; and to safeguard the interests of, and provide adequate information to, counterparties or clients. Based on these needs, effective execution of this mandate, including monitoring compliance with these requirements, will require an authority with a mandate to supervise or regulate the OTCD business conduct of market participants to typically access transaction-level data for market participants within its legal jurisdiction.

OTC Derivative transactions may be conducted on regulated trading platforms. Authorities which regulate, supervise or oversee such trading platforms may require access to data pertaining to transactions conducted on these facilities. If an authority regulates, supervises or oversees an exchange, an organised market or an organised trading platform, then that authority would typically have an interest in data for transactions conducted on that exchange, organised market or organised trading platform based at the transaction level. For example, to address market integrity concerns, authorities may need to reconstruct trades and create an audit trail. In order to do so, it would be necessary to have full transaction-level details. Named data would be necessary to map the participants to the trading platform and the counterparties to the transactions registered in the TR.

Authorities that regulate, supervise or oversee CCPs would typically have an interest in data pertaining to transactions cleared by these facilities. Given the critical function that CCPs play in the OTCD markets, authorities that regulate, supervise or oversee these entities need to ensure the safety and efficiency of the CCP itself or its compliance with relevant regulatory requirements. Most of the risk management functions handled by a CCP, such as exposure calculations and margining, are based on the transactions cleared by the entity. Although authorities will need more than data held in a TR to effectively look at a CCP’s management functions, an authority will require full access to the TR data on underlying transactions, to enable it to confirm the risk borne by the CCP and evaluate the risk management functions of the CCP.

A Trade Repository may serve a number of stakeholders that depend on having effective access to Trade Repository services, both to submit and retrieve data. In addition to relevant authorities and the public, other stakeholders can include exchanges, electronic trading venues, confirmation or matching platforms, and third-party service providers that utilise Trade Repository data to offer complementary services. It is essential, therefore, for a Trade Repository to design its access policies and terms of use in a manner that supports fair and open access to its services and data. Another important benefit of a Trade Repository is its promotion of standardisation through the provision of a common technical platform that requires consistency in data formats and representations. The result is a centralised store of transaction data with greater usefulness and reliability than when the data are dispersed.

For a Trade Repository, ensuring fair and open access is very important since there may be only one Trade Repository for a particular market and a wide set of stakeholders may need effective access to the Trade Repository’s data warehousing services, both to store and retrieve data. Access is critical for participants storing trade information in the Trade Repository and for platforms that may submit transaction data on behalf of participants, including exchanges, electronic trading venues, and confirmation or matching service providers. In addition, other stakeholders or platforms that offer ancillary services may need to obtain trade information from the Trade Repository to use as input.

In addition, a Trade Repository should provide terms of use that are commercially reasonable and aim to support interconnectivity with other stake holders and service providers, where requested, so that competition and innovation in post-trade processing are not impaired as a result of the centralising of recordkeeping activity. A Trade Repository should not engage in anti-competitive practices such as product or service tying, employing contracts with non-compete and exclusivity clauses, overly restrictive terms of use, or anti-competitive price discrimination. A Trade Repository should also not develop closed, proprietary interfaces that result in vendor lock-in or barriers to entry with respect to competing service providers that rely on the data maintained by the Trade Repository.

A Trade Repository should provide timely and accurate data to relevant authorities and the public in line with their respective needs. A Trade Repository should provide data in line with regulatory and industry expectations to relevant authorities and the public, respectively, that is comprehensive and at a level of detail sufficient to enhance market transparency and support other public policy objectives. A Trade Repository should have effective processes and procedures to provide data to relevant authorities in a timely and appropriate manner to enable them to meet their respective regulatory mandates and legal responsibilities. A Trade Repository should have robust information systems that provide accurate current and historical data. Data should be provided in a timely manner and in a format that permits it to be easily analysed

Trade Repositories may play a fundamental role in providing market transparency and, as such, effective access by relevant authorities and the public to the data recorded in Trade Repositories is critical. Trade Repositories are particularly important in the OTC derivatives markets. From a public policy perspective, the data maintained and generated by the operations of a Trade Repository and on behalf of its participants should promote market transparency and foster public policy objectives, subject to relevant laws involving disclosures of sensitive information. Transparency to market participants supports investor protection as well as the exercise of market discipline. Transparency to the broader public helps build greater confidence in, and understanding of, markets, and informs and builds support for sound public policies. Authorities may identify other policy objectives specific to an individual Trade Repository’s role in supporting market transparency in addition to these core policy objectives.

A Trade Repository should provide data in line with regulatory and industry expectations to relevant authorities and the public, respectively, that is comprehensive and at a level of detail sufficient to enhance market transparency and support other public policy objectives. The scope and level of detail of the data that a Trade Repository provides will vary depending on the respective information needs of relevant authorities, the Trade Repository’s participants, and the public. At a minimum, a Trade Repository should provide aggregate data on open positions and transaction volumes and values and categorised data (for example, aggregated breakdowns of trading counterparties, reference entities, or currency breakdowns of products), as available and appropriate to the public. Relevant authorities should have access to additional data recorded in a Trade Repository, including participant level data, that is relevant to their respective regulatory mandates and legal responsibilities, which may include market regulation and surveillance, oversight of market infrastructures, prudential supervision, facilitating resolution of failed institutions, and systemic risk regulation

A Trade Repository should have processes and procedures to provide data to relevant authorities in a timely and effective manner to enable them to meet their respective regulatory mandates and legal responsibilities. For example, a Trade Repository should have procedures to facilitate enhanced monitoring, special actions, or official proceedings taken by relevant authorities in relation to data regarding troubled or failed participants by making relevant information in the Trade Repository available in a timely and effective manner. The provision of data from a Trade Repository to relevant authorities should be supported from a legal, procedural, operational, and technological perspective. Where confidentiality and legal barriers in relevant jurisdictions restrict a Trade Repository’s ability to provide data to relevant domestic or international authorities, the Trade Repository should communicate such restrictions to these authorities so that authorities can take appropriate action. A Trade Repository also should have a process in place to work with relevant authorities to resolve any data sharing restrictions and comply with applicable law where there are specific regulatory data needs.

To meet the information needs of participants, authorities, and the public, a Trade Repository should have robust information systems to provide accurate current and historical data. A Trade Repository should collect, store, and provide data to participants, authorities and the public in a timely manner and in a format that can facilitate prompt analysis. Data should be made available that permits both comparative and historical analysis of the relevant markets. The criticality of a Trade Repository’s or its market’s role should be a consideration in the frequency and speed with which data and other information are disclosed. If a Trade Repository is one of several providing services to a particular market, the Trade Repository should provide basic data and other information in a manner that can be easily analysed and compared to information provided by others serving the market. A Trade Repository should consult with relevant authorities, including its regulatory, supervisory, or oversight authority in developing and maintaining a reporting framework that facilitates analysis and comparison of data from other Trade Repositories.

A Trade Repository should make the data and other relevant information it discloses readily available through generally accessible media in a language commonly used in financial markets in addition to the domestic language(s) of the jurisdiction in which the Trade Repository is located. The data should be accompanied by robust documentation that enables users to understand and interpret the data correctly.

Authorities directly responsible for the regulation, supervision, and oversight of a Trade Repsoitory that maintains data pertaining to other jurisdictions should coordinate with other relevant authorities to ensure timely and effective access to market data and establish an appropriate data access process that is fair and consistent with the responsibilities of the other relevant authorities. All relevant authorities should mutually support each other’s access to data in which they have a material interest in furtherance of their regulatory, supervisory, and oversight responsibilities, regardless of the particular organisational form or geographic location of a Trade Repository.

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